Convergence of China's regional incomes

China's regional convergence in panels with multiple structural breaks

“…This fact may also account for the discrepancies in the results compared with those of Zhang et al (2001), where one endogenous break point is assumed in their estimation.…”

“…With regard to the convergence hypothesis of provincial per capita outputs in China, there are several contributions to the literature, such as Zhang, Liu and Yao (2001) and Pedroni and Yao (2006), that use unit root testing methods for a single time 1 Bernard and Durlauf (1995), Oxley and Greasley (1995), Hobijn and Franses (2000), Pesaran (2004), Lim and McAleer (2004), etc. series and panel data sets. 2 Zhang et al (2001) aggregated the real per capita GDP of 30 Chinese provinces from 1952-1997 into three regions (the Eastern, Central, and Western regions) in accordance with the official classification and then applied the Augmented Dickey-Fuller t-test and the unit root test with a break suggested by Perron (1994) to the relative regional and national per capita GDPs of each of the three regions.…”

“…2 Zhang et al (2001) aggregated the real per capita GDP of 30 Chinese provinces from 1952-1997 into three regions (the Eastern, Central, and Western regions) in accordance with the official classification and then applied the Augmented Dickey-Fuller t-test and the unit root test with a break suggested by Perron (1994) to the relative regional and national per capita GDPs of each of the three regions.…”

“…3 Smyth and Inder (2004) In all the figures, we observe apparent shifts in the level of the series corresponding to 3 Carlino and Mills (1993), Greasley and Oxley (1997), and Li and Papell (1999) have examined convergence using unit root tests which can deal with a breaking time series. 4 This classification of provinces is nearly identical to that of Zhang et al (2001), but the aggregation of provincial series is not conducted in this paper. The details will be described in Section 4.1.…”

“…These shifts coincide with the occurrences of the events mentioned above. Based on these findings, some studies have focused on the presence of structural changes in the annual series in China (Li, 2000;Zhang et al, 2001;and Smyth and Inder, 2004); these studies have adopted unit root testing methods permitting one or two breaks in a single time series for the analysis of the nonstationarity of the macroeconomic or provincial time series.…”